Investing

5 Surprisingly Strong Dow Stock Upgrades, Plus Berkshire Hathaway

Home Depot (vs. Lowe’s)

Barclays started Home Depot Inc. (NYSE: HD) as Overweight with a $150 price target on the last day of March. This was in a controversial retail sector call in which Wall Street favorites were not necessarily given high marks, and rival Lowe’s Companies Inc. (NYSE: LOW) was only started as Equal Weight.

On Home Depot, the prior close was $133.42, and shares closed at $134.85 on Friday. Home Depot’s consensus analyst target is $142.17, and its 52-week range is $92.17 to $135.47. Coming into this call from Barclays, Home Depot was up 1.4% so far in 2016, versus a 0.4% gain for Lowe’s. Over the past year, Home Depot shares were up 18.8% and Lowe’s was up 3.2%.

So far in 2016, Home Depot has already raised its dividend, has been projected to be among the largest buybacks of the year, and it was a top UBS pick on its Quality Growth at a Reasonable Price (Q-GARP) list. Home Depot shares were up 2.5% so far in 2016, but that is actually up almost 20% from this time a year ago.


3M

Last week, 3M Co. (NYSE: MMM) hosted its analyst meeting. Analysts like what they heard, and 3M already delivered on dividend hikes and buybacks. 3M shares were at $167.53 at the end of the week, up only marginally from the prior week’s close.

Many analysts came in with higher price targets. Bernstein raised its target to $170 from $160, and Morgan Stanley raised its target to $157 from $146. UBS has a Buy rating, but raised its target price to $190 from $175. Merrill Lynch keyed in on 3M, reiterating its Buy rating and its $178 price target.

Earlier in the week, Deutsche Bank assumed coverage of 3M with a Hold rating and 12-month price target of $175. Thomson First Call has a consensus target of about $164, but the so-called Smart Estimate from Reuters is closer to $178.

Berkshire Hathaway

A blue chip is generally considered to be a member of the Dow Jones Industrial Average. That is only 30 stocks, and the S&P Indexes group has restrictions on how companies can be measured. That being said, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) would be a Dow stock in the mind of most investors by most counts. A dual-class share structure matters here, as does the internal ownership and control of Buffett.

This week brought a new Buy rating from UBS for Berkshire Hathaway. The firm assigned a $244,500 price target, up about 12% from the share price of $215.740 on Friday’s close. Buffett’s big stake in IBM is no longer looking like a way of just burning money.

24/7 Wall St. already covered this analyst call in more detail, but UBS thinks that market conditions and uncertainty will play into the hands of the company. The firm thinks that Berkshire Hathaway’s book value has a lot of room to grow for a higher peer valuation than the discount currently seen.

Other key pieces from the week:

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